Bailing Out Detroit

October 27, 2008

It's been clear for quite some time that GM badly miscalculated by assuming gas prices would stay low forever and SUV sales could keep the automaker afloat for years and years to come. Even so, the big New York Timesblow-by-blow of that story is well worth reading, including a report that its execs nixed a $2 billion overhaul of its SUV line "without a single dissenting vote" last May.

On a related note, the Post today thunders against Congress's low-interest loans to the Big Three. Though I don't agree that auto workers making $56,000 per year are "relatively privileged" (save that for the bankers getting bailed out right now), it's true that there's no reason Congress should favor certain automakers over others. On the other hand, the Post is being terribly short-sighted about the new $7,500 tax credit for customers who purchase plug-in hybrids or electric vehicles—those don't just help GM, they help anyone who can build an electric car. And, yes, it's initially a subsidy for the rich, but it's also a decent way to expand the market for these gadgets so that eventually prices can tumble down, plug-ins can become widespread, and we can start reducing emissions and oil consumption in a major way. (How do the editors think their beloved Priuses got off the ground? Magic?)